Berentsen, Aleksander; Brügger, Esther; Lörtscher, Simon (14 April 2003). On Cheating and Whistle-Blowing (Diskussionsschriften 03-02). Bern: Universität Bern Volkswirtschaftliches Institut
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We study the role of whistle-blowing in the following inspection game. Two agents who compete for a valuable prize can either behave legally or illegally. After the competition, a controller investigates the agents’ behavior. This control game has a unique equilibrium in mixed strategies. We then add a whistle-blowing stage, where the controller asks the loser to blow the whistle. This extended game has a unique perfect Bayesian equilibrium in which only a cheating loser accuses the winner of cheating and the controller tests the winner if and only if the winner is accused of cheating. Whistle-blowing reduces the frequencies of cheating, is less costly in terms of test frequencies, and leads to a strict Pareto-improvement if punishments for cheating are sufficiently large.
Item Type: |
Working Paper |
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Division/Institute: |
03 Faculty of Business, Economics and Social Sciences > Department of Economics |
UniBE Contributor: |
Lörtscher, Simon |
Subjects: |
300 Social sciences, sociology & anthropology > 330 Economics |
Series: |
Diskussionsschriften |
Publisher: |
Universität Bern Volkswirtschaftliches Institut |
Language: |
English |
Submitter: |
Aline Lehnherr |
Date Deposited: |
11 Jun 2020 16:58 |
Last Modified: |
05 Dec 2022 15:38 |
JEL Classification: |
C72, D82, K42 |
BORIS DOI: |
10.7892/boris.144018 |
URI: |
https://boris.unibe.ch/id/eprint/144018 |
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